NEW DELHI: Government officials have denied the reports that India and Russia have suspended negotiations on trade settlement in Indian rupee. The officials admitted that there are issues on how Russia could use the excess rupee in Vostro accounts, but the talks to iron out these differences continue. A foreign wire service reported on Monday that India has given up hope on Russia using rupee as means for taking payments for supplies (largely crude oil) to India.
Government sources told this newspaper that Russia is yet to figure out the use of surplus rupee they would have in the special Vostro accounts in India. The Indian side has been convincing Russia to use the excess rupee lying in Vostro accounts in India for other purposes including investment in equities and bonds. However, Russia has not warmed up to the idea yet.
As per reports, Moscow believes that the high trade gap in favour of Russia, will lead to an annual rupee surplus of over $40 billion because of trade settlement in local currency. It feels rupee accumulation is ‘not desirable’ for the country.
A top government official said dollar is still the most preferred currency and it would take many years for rupee to become a strong currency. In August last year, the Reserve Bank of India allowed Russia to open special Vostro accounts in India through which they can invest in India’s equity and bond markets. “Russia is a bit perplexed as to how it can invest in India’s equity and bond market. We are trying to explain the advantages but they have yet to take a call,” a top government said.
A top PSU banker also said he wasn’t aware of any such development as the talks were being held between the two until recently. India imports more from Russia since it invaded Ukraine as the country is getting cheaper oil. Its imports rose to $51.3 billion until April 5, from $10.6 billion in the same period of last year, as per reports. Meanwhile, exports from India in the same period plunged marginally to $3.43 billion from $3.61 billion in the previous year. As many as 18 countries have opened special rupee Vostro accounts with India for facilitating trade in local currency with India.
Russia yet to figure out use of surplus `
A foreign wire service reported on Monday India has given up hope on Russia using rupee as means for taking payments for supplies to India. Government sources told Russia is yet to figure out the use of surplus rupee they would have in the special Vostro accounts in India